The Budget does not have any big trigger for a sharp rally immediately and at the same time, there is nothing to spark a sell-off. Having run up this far, an element of volatility was always expected in the market on the Budget day. We have seen many big announcements in previous Budgets but execution has been lacking.
Moreover, there is no need to read too much into the market movement on a Budget day. The Railway Budget saw rail-related stocks getting hammered that day, only to see these rise the next day. I expect the market to consolidate around these levels..
Read our full coverage on Union Budget
Much before the Budget, we have seen a host of initiatives taken by the government. Now that the Budget is out of the way, attention will be on what the government does in areas such as coal, power, renewable energy, roads, goods and services tax, dedicated freight corridors, defence, railways and direct benefits transfer.
The steps taken should translate into higher economic and earnings growth over the next couple of years. Low commodity prices, falling interest rates and improved business & consumer sentiments, should help drive higher earnings growth in FY16.
Foreign institutional investors will continue to keep India high on their wish list as the Budget provides reasonable clarity of thought and vindicates their pro-reform agenda.
Visible growth on the ground and improvement in corporate profitability in the coming quarters will result in a further rerating of the market. Banks are a good proxy for the economy and I would watch this sector closely. Though few private sector banks would be the first choice, the public sector banks also offer better valuation if the overall economy is set to prosper.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.